Gold prices in free fall! Gold drops almost 10% from peak, yellow metal down over Rs 12,000 from high; what should investors do?

Investors are worried about the correction, and whether this indicates a substantial downturn or presents an opportunity for investment. (AI image(

Gold rate today: Gold prices have been in free fall for the last few days, dropping over Rs 12,000 from their all-time peak on the Multi Commodity Exchange (MCX). The yellow metal has seen a 9.6% correction, dropping sharply from its peak of Rs 1,32,294 per 10 grams to current levels around Rs 1,19,605 – a dip of Rs 12,700! Investors are worried about the correction, and whether this indicates a substantial downturn or presents an opportunity for investment. The market conditions remain uncertain, with fluctuating patterns influenced by impending international developments.

Why are gold prices in free fall?

The prospect of a trade agreement between the US and China has reduced the attractiveness of gold, which investors typically favour during periods of uncertainty. Renisha Chainani, Head – Research at Augmont, told ET, “Gold prices have fallen below $4000 and Silver $47 as bullion’s appeal as a safe-haven was somewhat diminished with indications of an easing of US-China trade tensions, and market players await this week’s Federal Reserve interest rate decision.”According to Chainani, “Top Chinese and US economic officials worked on the terms of a trade agreement on Sunday, which will be decided upon later this week by US President Donald Trump and his Chinese counterpart, Xi Jinping.”Additionally, investors are closely monitoring the Federal Reserve’s interest rate announcement.“If the Fed adopts a dovish stance with this week’s anticipated rate decrease, however, this might be countered,” Chainani notes, explaining that reduced interest rates could boost interest in non-interest-bearing assets such as gold.

Gold price outlook: What should investors do?

MCX December gold futures declined 1.08% to Rs 1,19,646 per 10 grams on Tuesday. During trading, prices briefly touched Rs 1,18,450 before showing partial recovery.According to Prithvifinmart Commodity Research’s Manoj Kumar Jain, key technical support levels remain intact despite recent price tests.“Gold is holding its make or break level of $3,870 and silver is holding its support level of $46.50 per troy ounce on a closing basis,” he told ET.He anticipates heightened volatility this week due to the Federal Reserve policy meeting and potential US-China developments.“Gold and silver are expected to trade in the range of $3,870–4,280 per troy ounce and silver in the range of $45.50–51.50 per troy ounce,” he said.For Indian markets, Jain identifies support levels between Rs 1,17,000–Rs 1,18,000 and resistance at Rs 1,20,500–Rs 1,21,400 for the week.He suggests prices could recover towards Rs 1,21,500 if these levels sustain, whilst silver might reach Rs 1,47,000 in the immediate future.According to Jateen Trivedi from LKP Securities, market sentiment is being influenced by the upcoming Fed meeting and recent geopolitical developments.“Gold traded weak by another Rs 2,500 at Rs 1,18,450 per 10 grams as sentiment turned negative following renewed optimism around a possible US-China trade deal.The focus now shifts to the US Fed’s interest rate decision on Wednesday night, which will guide the next leg of the trend,” he said.“Gold remains under pressure with key support at Rs 1,16,500–Rs 1,18,000, while resistance is seen near Rs 1,21,000–Rs 1,22,000.”Analysts are maintaining a cautious stance, acknowledging potential further price declines whilst anticipating support near Rs 1,17,000. Current market conditions, affected by both economic uncertainty and technical factors, suggest increased price fluctuations in the near term.Despite the recent price decline presenting a possible entry opportunity for long-term investors, market observers are awaiting signals from the Fed meeting and US-China discussions before suggesting directional moves.Price volatility is expected to persist in the interim. As per Manoj Jain’s observation, “Gold and silver are seeing short covering at current levels and long-term investors must hold their long positions.”(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)